**United
States**


**Securities
and Exchange Commission**


**Washington,
DC 20549**







**FORM
10-QSB** ****


****





**Quarterly
Report Under Section 13 or 15(d)**


**of
the Securities Exchange Act of 1934**





**For
      the quarterly period ended********June 30,
      2005**
    **Commission
      file
      number********0-15070**





**REGENERX
BIOPHARMACEUTICALS,
INC.**


**(Exact
name of small business issuer as specified in its charter)**








**Delaware**
    **52-1253406****(State
      of Incorporation)******
    **(IRS
      Employer I.D. Number)**








**3
Bethesda Metro Center**


**Suite
630**


**Bethesda,
Maryland 20814**


**(Address
of principal executive offices)**








**Issuer's
telephone number, including area code** **:** **(301)
280-1992**







Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x  No o





37,604,024 **** shares
of RegeneRx Biopharmaceuticals, Inc. Common Stock, par value $.001 per share,
were outstanding as of June 30, 2005.




Transitional
Small Business Disclosure Format (Check One) Yes o  No x
















**RegeneRx Biopharmaceuticals, Inc.**


**Form
10-QSB**


**Quarterly
Period Ended June 30, 2005**





**Index**





Part
      I.Financial Information
    Page
      No.Item
      1.
    Financial StatementsBalance Sheets at June 30, 2005 (unaudited) and December
      31, 2004
    3Statements of Operations for the three and six months
      ended June 30, 2005 (unaudited) and June 30, 2004
      (unaudited)
    4Statements of Cash Flows for six months ended June 30,
      2005 (unaudited) and June 30, 2004 (unaudited)
    5Notes to Financial Statements
      (unaudited)
    6Item
      2.
    Management's Discussion and Analysis or Plan of
      Operation
    10Item
      3.
    Controls and Procedures
    13Part
      II.Other InformationItem
      1.
    Legal Proceedings
    13Item
      2.
    Unregistered Sales of Equity Securities and Use
      of Proceeds
    13Item
      3.
    Defaults Upon Senior Securities
    13Item
      4.
    Submission of Matters to a Vote of Security
      Holders
    13Item
      5.
    Other Information
    14Item
      6.
    Exhibits
    14Signatures
    
    
    17





2


Table of Contents




**Part I - Financial Information**





**Item 1. Financial Statements**




**RegeneRx Biopharmaceuticals, Inc.**
 **Balance
Sheets**


**June
      30,**
      **2005**
    ****
    **December
      31,**
      **2004**
    ********
    ****
    **(unaudited)**
    ****ASSETSCurrent
      assetsCash
      and cash equivalents
    
    $
    5,132,774
    
    $
    2,874,260Due
      from related party
    
    
    8,964
    
    
    12,357Deferred
      Office Costs
    
    
    —
    
    
    75,884Other
      current assets
    
    
    66,663
    
    
    30,338Total
      current assets
    
    
    5,208,401
    
    
    2,992,839Fixed
      assets, net
    
    
    58,900
    
    
    2,587Deferred
      patent costs, net
    
    
    429,573
    
    
    293,075Other
      assets, net
    
    
    17,078
    
    
    —Total
      assets
    
    $
    5,713,952
    
    $
    3,288,501LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
    
    $
    176,286
    
    $
    405,997Accrued
      expenses
    
    
    89,734
    
    
    173,925Total
      current liabilities
    
    
    266,020
    
    
    579,922Commitments
    
    
    —
    
    
    —Stockholders'
      equityPreferred
      stock, $.001 par value per share, 1,000,000 authorized; no shares
      issued
    
    
    —
    
    
    —Common
      stock, par value $.001 per share, 100,000,000 shares authorized;
      37,604,024 and 34,577,356 issued and outstanding,
      respectively
    
    
    37,604
    
    
    34,577Additional
      paid-in capital
    
    
    54,797,689
    
    
    45,179,591Stock
      subscription receivable
    
    
    (4,999,999
    )
    
    —Accumulated
      deficit
    
    
    (44,387,362
    )
    
    (42,505,589
    )Total
      stockholders' equity
    
    
    5,447,932
    
    
    2,708,579Total
      liabilities and stockholders' equity
    
    $
    5,713,952
    
    $
    3,288,501The
      accompanying notes are an integral part of these financial
      statements.




3


Table of Contents




**RegeneRx Biopharmaceuticals,
Inc.**


**Statements
of Operations**
 (Unaudited)


**Three-months
      ended**
      **June
      30,**
    ****
    **Six-months
      ended**
      **June
      30,****2005**
    ****
    **2004**
    ****
    **2005**
    ****
    **2004**Revenues
    
    $
    —
    
    $
    —
    
    $
    —
    
    $
    —ExpensesResearch
      and development
    
    
    575,289
    
    
    144,607
    
    
    1,051,515
    
    
    975,947General
      and administrative
    
    
    437,348
    
    
    219,800
    
    
    886,145
    
    
    551,366Total
      expenses
    
    
    1,012,637
    
    
    364,407
    
    
    1,937,660
    
    
    1,527,313Operating
      loss
    
    
    (1,012,637
    )
    
    (364,407
    )
    
    (1,937,660
    )
    
    (1,527,313
    )Other
      income (expense)Interest
      income
    
    
    29,227
    
    
    2,821
    
    
    55,887
    
    
    6,445Other
      expense
    
    
    —
    
    
    (6
    )
    
    —
    
    
    (36
    )Total
      other income
    
    
    29,227
    
    
    2,815
    
    
    55,887
    
    
    6,409Net
      loss
    
    $
    (983,410
    )
    $
    (361,592
    )
    $
    (1,881,773
    )
    $
    (1,520,904
    )Basic
      and diluted net loss percommon
      share
    
    $
    (0.03
    )
    $
    (0.01
    )
    $
    (0.05
    )
    $
    (0.05
    )Weighted
      average number of common shares outstanding
    
    
    36,189,141
    
    
    32,591,635
    
    
    36,054,927
    
    
    32,263,881The
      accompanying notes are an integral part of these financial
      statements.




4


Table of Contents




**RegeneRx Biopharmaceuticals,
Inc.**
 (Unaudited)


**Six-months
      ended**
      **June
      30,**
    ********
    ****
    **2005**
    ****
    **2004**Cash
      flows from operating activities:Net
      loss
    
    $
    (1,881,773
    )
    $
    (1,520,904
    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
    
    
    6,489
    
    
    2,110Compensation
      expense for stock options
    
    
    90,511
    
    
    13,621Changes
      in operating assets and liabilities:(Increase)
      decrease:Other
      current assets
    
    
    (36,325
    )
    
    (10,965
    )Due
      from related party
    
    
    3,393
    
    
    6,823Other
      assets
    
    
    (17,078
    )
    
    —Increase
      (decrease):Accounts
      payable
    
    
    (250,854
    )
    
    (3,552
    )Accrued
      expenses
    
    
    (8,307
    )
    
    (46,108
    )Net
      cash used in operating activities
    
    
    (2,093,944
    )
    
    (1,558,975
    )Cash
      flows from investing activities:Purchase
      of fixed assets
    
    
    (61,908
    )
    
    (1,598
    )Patents
      costs
    
    
    (137,391
    )
    
    (119,823
    )Net
      cash used in investing activities
    
    
    (199,299
    )
    
    (121,421
    )Cash
      flows from financing activities:Issuance
      of common stock
    
    
    4,616,500
    
    
    2,259,737Proceeds
      from exercise of warrants
    
    
    4,500
    
    
    13,645Proceeds
      from exercise of options
    
    
    6,650
    
    
    —Stock
      Offering Costs
    
    
    (75,893
    )
    
    —Net
      cash provided by financing activities
    
    
    4,551,757
    
    
    2,273,382Net
      increase in cash and cash equivalents
    
    
    2,258,514
    
    
    592,986Cash
      and cash equivalents, at beginning of period
    
    
    2,874,260
    
    
    1,019,889Cash
      and cash equivalents, at end of period
    
    $
    5,132,774
    
    $
    1,612,875The
      accompanying notes are an integral part of these financial
      statements.




5


Table of Contents




**RegeneRx Biopharmaceuticals, Inc.**


**Notes
to Financial Statements**


**For
the three-months ended June 30, 2005 and 2004 (Unaudited)**





A. General





RegeneRx
Biopharmaceuticals, Inc. (the “Company”), a Delaware corporation, was
incorporated in 1982. The Company operates in a single industry segment focused
on biotechnology. In general, the biotechnology industry consists of researching
and developing new pharmaceutical products for the treatment of diseases or
conditions that arise as a result of infections, cancer, autoimmune disease and
genetic abnormalities. The Company’s curre nt
primary business focus is the commercialization of Thymosin beta 4
(“Tβ4” ),
a 43 amino acid peptide, as a therapeutic platform to accelerate the healing of
injured tissues or organs, and prevent damage to dermal, ocular, and
cardiovascular tissues, among others.




The
Company currently has no products that have received regulatory approval. During
1997, the Company entered into a Material Transfer Agreement - Cooperative
Research and Development Agreement (“CRADA”) with the National Institutes of
Health (“NIH”).
In exchange for providing Tβ4  and
certain data, the Company received an option to elect to negotiate for an
exclusive or non-exclusive commercialization license from the NIH pursuant to a
patent application filed by NIH in 1998. On February 6, 2 001,
the Company signed a licensing agreement with NIH whereby the Company obtained
an exclusive world-wide license to Tβ4  under
the patent application filed in 1998. In exchange for the exclusive license, the
Company must make certain royalty and milestone payments to the NIH. To date,
all payments due have been made.


The
Company anticipates incurring additional losses in the future as it continues
development of Tβ4 and expands clinical trials for other indications of Tβ4. To
achieve profitability, th e
Company, alone or with others, must successfully develop and commercialize its
technologies and proposed products, conduct pre-clinical studies and clinical
trials, obtain required regulatory approvals and successfully manufacture and
market such technologies and proposed products. The time required to reach
profitability is highly uncertain, and there can be no assurance that the
Company will be able to achieve profitability on a sustained basis, if at all.





The
Company has incurred negative cash flows from operations since its inception.
The Company has expended and expects to continue to expend in the future,
substantial funds to complete its planned product development efforts.
Management will continue to refine its operations, control expenses, evaluate
alternative methods to conduct its business, and seek available and attractive
sources of financing and sharing of development costs through strategic
collaboration agreements or other resources. Should appropriate sources of
financing not be available, management would delay certain clinical trials and
research activities until such time as appropriate financing was available.
While management believes it will be able to successfully continue its planned
development efforts, there can be no assurance that those efforts will be
successful. If adequate funds are not available, the Company’s financial
condition and results of operations will be materially and adversely affected.





Should
the Company obtain substantial additional funding, other factors including
competition, dependence on third parties, uncertainty regarding patents,
protection of proprietary rights, manufacturing of peptides and technology
obsolescence could also have a significant impact on the Company and its
operations.








B. Financial
Statements





The
Balance Sheet as of June 30, 2005, the Statements of Operations for the three
and six month periods ended June 30, 2005 and June 30, 2004, and the Statements
of Cash Flows for the six-month periods ended June 30, 2005 and June 30, 2004,
have been prepared without audit. In the opinion of management, all adjustments
necessary to present fairly the financial position, results of operations, and
cash flows at June 30, 2005 and June 30, 2004, and for the periods then ended,
have been recorded. All adjustments recorded were of a normal recurring
nature.





6


Table of Contents




The
accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and pursuant to rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States for complete
financial statement presentation. In the opinion of management, such unaudited
interim information reflects all necessary adjustments, consisting of only
normal recurring adjustments, necessary to present the Company’s financial
position and results of operations for the periods presented. The results of
operations for interim periods are not necessarily indicative of the results to
be expected for a full fiscal year. These statements should be read in
conjunction with the financial statements and related notes included in the
Company’s Form 10-KSB for the year ended December 31, 2004.





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and reported amounts of revenue and expenses during the reported
period. Actual results could differ from those estimates.





C. Net
Loss per Share





Net
loss per share is based on the weighted average number of common shares
outstanding during the three and six-month periods ended June 30, 2005 and June
30, 2004. During these periods options and warrants were not included in the
calculation as their effect would be anti-dilutive.





D. Stock
Based Compensation





The
Company applies the intrinsic-value method of accounting prescribed by
Accounting Principles Board Opinion No. 25 (“APB 25”), Accounting for Stock
Issued to Employees, and related interpretations including FASB Interpretation
No. 44 (“FIN 44”) Accounting for Certain Transactions Involving Stock
Compensation, an interpretation of APB 25, to account for its fixed-plan stock
options. Under this method, compensation expense is not recorded in the
financial statements for stock issued to employees under non-compensatory plans.
Statement of Financial Accounting Standards No. 123 (“SFAS 123”),
Accounting for Stock-Based Compensation, established accounting and disclosure
requirements using a fair-value-based method of accounting for stock-based
employee compensation plans. As allowed by SFAS 123, the Company has elected to
continue to apply the intrinsic-value-based method of accounting described
above, and has adopted only the disclosure requirements of SFAS 123 as amended
by Statement of Financial Accounting Standards No. 148, Accounting for
Stock-Based Compensation—Transition and Disclosure, Amendment of SFAS 123
(“SFAS 148”). A cost for equity instruments issued to non-employees has
been recognized in the accompanying financial statements based on the fair value
of the consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable in accordance with SFAS 123,
Emerging Issues Task Force (“EITF”) No. 96.18, Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods and Services, and Staff Accounting Bulletin (“SAB
107”).





7


Table of Contents




The
following table summarizes relevant information as to reported results under the
Company’s intrinsic-value method of accounting for stock awards, with
supplemental information as if the fair value recognition provisions had been
applied:





**Six
      Months Ended****June
      30****2005**
    
    **2004**Pro
      forma net loss:As
      reported
    
    $
    (1,881,773
    )
    $
    (1,520,904
    )Total
      employee non-cash stock compensation expense determined under fair value
      based method for all awards
    
    
    (108,849
    )
    
    (38,691
    )Pro
      forma net loss
    
    $
    (1,990,622
    )
    $
    (1,559,595
    )Net
      loss per common share:Basic
      and diluted—as reported
    
    $
    (0.05
    )
    $
    (0.05
    )Basic
      and diluted—pro forma
    
    $
    (0.06
    )
    $
    (0.05
    )





The
fair value for each option granted was estimated as the date of grant using the
Black-Scholes option-pricing model, assuming no expected dividends. The risk
free rate of return was established for each award, based on the date of grant
and the expected life of the award. Given the Company’s limited historical data,
the expected life was determined in accordance with SAB 107 guidance for “plain
vanilla” options. The volatility was determined, based on the historical, daily
closing price of the Company’s publicly-traded stock, as measured for a time
period consistent with the expected life of the option. Approximate values of
these assumptions follow:






**2005**
    ****
    **2004**Risk
      free rate of return
    
    
    4.30%
    
    
    2.67%Expected
      life (in years)
    
    
    6.00
      - 6.75
    
    
    5.00Volatility
    
    
    400
      - 450%
    
    
    50%








In
December 2004, the FASB issued Statement of Financial Accounting Standards No.
123 (revised 2004), Share-Based Payment (“SFAS 123(R)”), “Share-Based Payment,”
which requires that the cost resulting from all share-based payments be
recognized in the financial statements. In addition, SFAS No. 123(R) establishes
fair value as the measurement objective in accounting for share-based payment
arrangements and requires all entities to apply a fair-value based measurement
method in accounting for share-based payment transactions with employees. The
Company believes the pro forma disclosures above provide an appropriate
short-term indicator of the level of expense that will be required to be
recognized in accordance with SFAS 123(R) in future periods. However, the total
expense recorded in future periods will depend on several variables, including
the number of shared-based awards that vest and the fair value of those vested
awards.




The
Company intends to adopt SFAS 123 (R)
on January 1, 2006.using the modified prospective application set forth in the
standard. Under the modified prospective application, the Company will recognize
as compensation cost, the fair value of all new awards issued after January 1,
2006, along with the fair value associated with modifications of existing
awards, to the extent modifications are entered into after that date. This cost
will be recognized over the requisite service period. Additionally and for
awards granted prior to January 1, 2006, previously unrecognized compensation
cost will be recognized as the requisite service is rendered.




8


Table of Contents




E. Patents





The
Company has capitalized $137,391 and $119,823 related to patent costs during the
six months ended June 30, 2005 and 2004, respectively. The Company’s accounting
policies for patents are as follows: (a) purchased patents are recorded at
acquisition costs (legal fees from a successful defense are also capitalized)
and (b) internally developed patents - the following costs are capitalized (1)
legal fees from the costs incurred in successful defense (2) other patent fees
(legal, registration) (3) models and drawings required for registration and
legal defense. The legal life of a patent is 20 years. Amortization commences
the date the patent is awarded. All research and development costs incurred in
developing the patentable idea are expensed as incurred.





F. Equity
Transactions





*Sale
of Common Stock and Issuance of Warrants*





On
January 5, 2005, the Company closed the second traunche of a private placement
of its common stock. Under the terms of the private placement, the Company sold
1,420,462 shares of common stock at $3.25 per share. In addition, the Company
granted 366,653 warrants, each which is exercisable immediately to purchase one
share of common stock at an exercise price ranging from $4.05 to $4.06 per share
and has a term of 36 months. The total funds raised in the private placement
totaled approximately $4.6 million.





On
June 23, 2005, the Company sold 1,538,461 shares of its common stock to Defiante
Farmaceutica, L.d.a., a wholly-owned subsidiary of Sigma-Tau Group, and two of
its affiliates, for $3.25 per share bringing the total consideration paid to $5
million. The investors may not sell or distribute the securities for five years
and have given their proxies to RegeneRx management to vote the shares during
the lock-up period. At the end of the five year lock-up period, RegeneRx, at its
option, may buy-back for $5.00 per share the number of shares required to
maintain Sigma-Tau's (and its affiliates') equity ownership at 30.1%, the same
percentage as it stood prior to this transaction. The payment for this sale was
received in early July 2005. Consequently the June 30, 2005 balance sheet
evidenced a stock subscription receivable in its equity section and the
Statement of Cash Flows for the six month period ended June 30, 2005 did not
evidence a receipt of funds. There were no placement fees associated with the
transaction.





*Exercise
of Warrants*





During
the six months ended June 30, 2005, the Company received $4,500 for the exercise
of warrants associated with 45,000 shares of the Company’s common stock. In
addition, 8,412 warrants were exchanged at prices ranging from $0.29 to $0.41
per share, for 7,745 shares of Common Stock. The Company also received $6,650
for the exercise of 15,000 options.





G. Segment
Information





The
Company views its operations and manages its business as one segment, the
development and marketing of T b 4.
Factors used to identify the Company’s single operating segment include the
financial information available for evaluation by the chief operating decision
maker in making decisions about how to allocate resources and assess
performance.





H. Other





In
March 2005 the Company was listed on the American Stock Exchange, ticker symbol:
RGN.





In
June 2005 the Company filed a Form S-3 to register $60 million worth of the
Company’s common stock and warrants to purchase common stock with the SEC. The
SEC declared that registration effective on August 9, 2005. The Company does not
presently have plans to issue any securities covered by this registration, but
may do so in the future.





9


Table of Contents




**ITEM
2.****Management’s
Discussion and Analysis or Plan of Operation**





This
item should be read in conjunction with the unaudited financial statements and
notes thereto of the Company contained in Item 1 of this report.





**Critical
Accounting Policies**





Capitalized
patent costs -
Consists of
costs incurred to prosecute the Company’s patents for a variety of potential
uses of Tβ 4
in a variety of jurisdictions. Quarterly, the Company reviews the status of its
capitalized patent costs and assesses whether a particular use and/or
jurisdiction will either be abandoned, or whether it appears that a patent will
not be awarded. If either of those two events appear reasonably possible, the
underlying cost is recognized as an expense in the quarter.





Share-based
payment -
On March 29, 2005 the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”),
which among other things set forth the staff’s views with regard to valuation
methods (including assumptions such as expected volatility and expected term).
In April 2005 the Company awarded stock options to existing employees, new
employees and members of the Company’s Board of Directors. Given the Company’s
limited historical data, the expected lives of these options were determined in
accordance with SAB 107 guidance for “plain vanilla” options, and the volatility
was determined, based on the historical, daily closing price of the Company’s
publicly-traded stock, as measured for a time period consistent with the
expected lives of the respective options. Given the Company’s significant
increase in historical stock prices and the resulting volatility estimate, a
fair market valuation for the option was set equal to the closing price of the
stock on the day of grant. The Company anticipates that the value of future
awards will be similarly in-line with the market price of the stock on the day
of grant. Starting in January 2006, the Company will adopt SFAS 123(R).
Accordingly the results of operations will reflect compensation costs for
options granted to employees, in addition to the cost already reflected for
options granted to non-employees. Please see Note D Stock Based Compensation in
the Notes to Financial Statements for additional information.





**Plan
of Operation**





Since
its inception in 1982 and until 1999, RegeneRx’s activities had consisted of
conducting research and development, sponsoring clinical trials of its
proprietary products, the construction and equipping of laboratory and
production facilities, and the manufacture of products for research, testing and
clinical trials. In 2000, RegeneRx adopted a modified business plan calling on
the outsourcing of most of the activities necessary to its mission of developing
its Thymosin beta 4 (“T b 4”)
platform for the treatment of chronic wounds. This business model allows for the
rapid and effective deployment of necessary resources without the burden of
expensive and unwieldy infrastructure. It also allows the company to expand or
contract its efforts depending on capital resources or other circumstances.
RegeneRx has not generated revenues from operations and does not anticipate
generating product revenues or other revenues from operations for the
foreseeable future. During the first six months of 2005, RegeneRx had no
revenues and had operating losses of $1,881,773. RegeneRx’s accumulated deficit
of $44,387,362 through June 30, 2005 has been funded primarily by the proceeds
from the issuance of equity securities (and interest earned on such funds), the
licensing of technology developed or acquired by RegeneRx, limited product sales
and royalties, and the sale of royalty rights. RegeneRx will require substantial
funding in order to complete research and development activities, manufacturing
for clinical trials, and the eventual marketing of any products that RegeneRx
intends to develop.





On
January 7, 2005, RegeneRx completed the sale of an aggregate of approximately
$5.8 million of common stock in a private placement transaction. ($1.2 million
was completed in December 2004 and $4.6 million was completed in January 2005.)
RegeneRx also issued warrants to investors to purchase over a period of three
years up to an aggregate of an additional 462,808 shares of RegeneRx common
stock at prices ranging from $4.05 to $4.06 per share. RegeneRx registered the
shares and the shares underlying the warrants purchased in this private
placement as part of a registration statement on Form S-3, which was declared
effective by the SEC on February 14, 2005.





On
June 23, 2005, the Company sold 1,538,461 shares of its common stock to Defiante
Farmaceutica, L.d.a., a Portuguese company that is a wholly owned subsidiary of
Sigma-Tau, S.p.A., a pharmaceutical company headquartered in Rome, Italy, and
two of its affiliates, for $3.25 per share bringing the total
consideration




10


Table of Contents




paid
to $5 million. The investors may not sell or distribute the securities for five
years and have given their proxies to RegeneRx management to vote the shares
during the lock-up period. At the end of the five year lock-up period, RegeneRx,
at its option, may buy-back for $5.00 per share the number of shares required to
maintain Sigma-Tau's (and its affiliates') equity ownership at 30.1%, the same
percentage as it stood prior to this transaction. The payment for this sale was
received in early July 2005.





Although
RegeneRx has no products that have received regulatory approval to date,
RegeneRx’s Investigational New Drug Application (“IND”) was accepted by the
United States Food and Drug Administration in December 2002 allowing RegeneRx to
commence the human testing of T b 4
for dermal wounds. RegeneRx initiated a Phase I human clinical trial in March
2003, which studies were designed to establish safety in human subjects, and
successfully completed the trial in September 2003. There were no significant
adverse events associated with the drug in Phase I and results demonstrated it
was well tolerated by all subjects. RegeneRx has recently raised additional
capital for Phase II trials, the first of which was cleared by FDA in November
2004. In the first quarter of 2005, two additional dermal Phase II trials were
cleared by FDA, including a trial to study patients with epidermolysis bullosa,
an orphan disease. RegeneRx believes the Phase II trials, which it hopes to
conduct in a somewhat parallel fashion, will take approximately 12-18 months
each and each will cost just over $2 million. Sigma-Tau under the Company’s
Phase II IND, will administer one of these three Phase II clinical trials in the
EU and will assume all associated costs of the trial. RegeneRx plans to
independently develop T b 4
in the United States for chronic dermal wounds through the end of Phase II or
Phase III clinical trials.





In
November 2004, based on a scientific paper published in the journal, Nature ,
showing that T b 4
was effective in protecting or repairing the heart after a heart attack in
animals, the Company decided to additionally pursue this clinical indication.
The Company is pursuing manufacturing and formulation efforts related to such
trials. RegeneRx expects to meet with the FDA to discuss its plans at the
earliest practicable time and initiate Phase I/II clinical trials as soon as
possible thereafter. RegeneRx has targeted early 2006 to file an IND for this
indication.





Based
on numerous scientific publications pertaining to potential ophthalmic
indications for Tβ4 as well as interest from its medical and scientific advisory
board, the Company is targeting certain ophthalmic clinical indications.
Presently the Company is conducting manufacturing and formulation efforts required to initiate ophthalmic
clinical trials. RegeneRx expects to meet with the FDA to discuss its plans at
the earliest practicable time and initiate Phase I/II clinical trials as soon as
possible thereafter. RegeneRx has targeted early 2006 to file and IND for this
indication.





In
July 2005 the first European patent related to Tß4 wound healing technology,
licensed from the National Institutes of Health in Bethesda, Maryland, was
granted to the Company. The original patent application, filed in 1999, claims
numerous compositions, uses and processes related to Tß4. Similar patent
applications have been submitted in other territories throughout the world,
including the U.S. and Asia. RegeneRx has independently filed over fifty
additional world-wide patent applications related to the technology platform.





On
January 22, 2004, RegeneRx exclusively licensed certain European rights to
T b 4
to Defiante. Defiante will develop T b 4
for internal and external wounds in Europe and certain other contiguous and
geographically relevant countries. The Agreement expires on a country-by-country
basis upon the later of the expiration of the last to expire of any granted
patent in the territory having at least one valid claim covering the products
then on the market, the expiration of any other exclusive or proprietary
marketing rights or twelve years from the effective date.





Under
the Agreement, Defiante will pay RegeneRx a royalty on commercial sales and will
purchase all required T b 4
from RegeneRx on an exclusive basis. When RegeneRx completes positive Phase II
clinical trials in the United States, Defiante must either pay RegeneRx $5
million or initiate pivotal Phase III clinical trials in Europe to maintain the
license. Defiante also will be obligated to attain future clinical and
regulatory milestones in the licensed territory. As those milestones are
obtained, certain performance criteria regarding commercial registration and
minimum annual royalties will be required in each licensed country. The
agreement does not prevent RegeneRx from sublicensing the technology in
countries outside the licensed territory, and has no impact on any U.S.
rights.





11


Table of Contents




*Results
of operations*





For
the three months ended June 30, 2005, the Company incurred a net loss of
$983,410 (or $0.03 per share), an increase of 172% as compared to a net loss of
$361,592 (or $0.01 per share) for the three months ended June 30, 2004. As
previously noted, the FDA cleared the Company to commence three Phase II
clinical trials. These clearances were received in November 2004 and early 2005.
Consequently, the results of operations for the three months ended June 30, 2005
included costs to expand and refine efforts necessary to commence these trials,
as compared to the Phase I trial work underway in 2004. These expanded efforts
included the manufacture of additional amounts of T β4,
new drug formulations and stability testing, and other non-clinical efforts, as well as initiation of
Phase II clinical activity. Additionally, the company increased its full-time
employee equivalents from four to six and in general expanded its intellectual
property efforts with regard to submission of new patent applications and
continued prosecution of current ones.





For
the six months ended June 30, 2005, the Company incurred a net loss of
$1,881,773 (or $0.05 per share), an increase of 24% as compared to a net loss of
$1,520,904 (or $0.05 per share) for the six months ended June 30,
2004.  The net loss for the six months ended June 30, 2005 includes all of
the expanded Phase II clinical trial work that was mentioned above.
Additionally, it is important to note that during these time periods, the
majority of the Company’s costs were generated under outsourced contracts for
specific work efforts and deliverables. These work efforts were discrete, in
that they were not necessarily of a continuing nature, and vary in size, scope,
and timing. Consequently, overall expenditures varied significantly, from one
period to another





*Liquidity
and capital resources*





At
June 30, 2005, RegeneRx had cash and cash equivalents totaling $5,132,774 and
working capital of $4,942,381. Total assets were $5,713,952. As noted above, the
Company also received $5 million in early July for the sale of common stock,
increasing the cash balance to approximately $10 million. RegeneRx has also
registered $60 million in common stock and warrants to purchase common stock
with the Securities and Exchange Commission and may sell those securities to the
public, if and when acceptable terms are negotiated with a potential buyer(s).
RegeneRx believes its cash reserves are presently sufficient to meet its
operating demands and will continually evaluate financing alternatives for the
expansion of its research, development and clinical trials programs. There is no
assurance that RegeneRx will be able to raise sufficient capital required to
execute its research and development plans and, unless substantial additional
capital is raised the Company will not be able to gain FDA approval for the sale
of T β 4
to the market.





The
Company believes its out-sourcing strategy has proven both cost beneficial and
has maximized shareholder value. The Company will therefore continue to operate
its out-sourcing strategy in the near term, by contracting research and
development work to other companies with established workforces and facilities.
For more information about RegeneRx’s out-sourcing strategy, see “Item 1.
Business” of the Annual Report on Form 10-KSB for the fiscal year ended December
31, 2004.





**Forward-looking
Statements**





When
used in this Form 10-QSB and in future filings by the Company with the
Securities and Exchange Commission, in the Company’s press releases or other
public or shareholder communications, and in oral statements made with the
approval of an authorized executive officer, the words or phrases "will likely
result," "are expected to," "will continue," "is anticipated," "estimate,"
"project" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are subject to certain risks and uncertainties, that
could cause actual results to differ materially from historical results and
those presently anticipated or projected. The Company wishes to caution readers
not to place undue reliance on any forward-looking statements, which speak only
as of the date made. The Company wishes to advise readers that various factors
could affect the Company's financial performance and could cause the Company's
actual results for future periods to differ materially from any opinions or
statements expressed with respect to future periods in any current statements.
These factors include, but are not limited to, the following: the Company’s lack
of revenues and history of losses; uncertainties related to the Company’s




12


Table of Contents




limited
capital resources; risks associated with the development of the Company’s
products; uncertainties related to the regulatory process; the Company’s lack of
product diversification; the Company’s dependence on collaborative relationships
with larger partners for the development, manufacturing and marketing of its
products; reliance upon key personnel; the Company’s ability to obtain and
protect intellectual property rights; and competition. The Company does not
undertake, and specifically declines any obligation, to publicly release the
result of any revisions that may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.





**ITEM
3.****Controls
and Procedures**





As
of the end of the period covered by this report, based on an evaluation of the
Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934)both of the chief executive
and chief financial officers of the Company have concluded that the Company’s
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in its Exchange Act reports is recorded,
processed, summarized and reported within the applicable time periods specified
by the SEC’s rules and forms.





There
were no significant changes in the Company’s internal controls or in any other
factors that could significantly affect those controls subsequent to the date of
the most recent evaluation of the Company’s internal controls by the Company,
including any corrective actions with regard to any significant deficiencies or
material weaknesses.





**Part II - Other Information**








**Item
1.****Legal
Proceedings**




****None








**Item
2.****Unregistered
Sales of Equity Securities and Use of Proceeds**





See
Form 8-K, June 23, 2005








**Item
3.****Defaults
Upon Senior Securities**





None








**Item
4.****Submission
of Matters to a Vote of Security Holders**




The
Annual Stockholders’ Meeting was held on June 23, 2005. The following matters
were submitted to the stockholders:


1.
    Election
      of Directors:Directors elected at the meeting for terms to
      expire in 2006.**Number
      of shares**
    ********
    
    ****
    **For**
    
    **Withheld**Allan
      L. Goldstein
    33,501,398
    
    37,331J.J.
      Finkelstein
    33,474,179
    
    64,550Albert
      Rosenfeld
    33,489,898
    
    48,831Joseph
      C. McNay
    33,521,398
    
    17,331Richard
      J. Hindin
    33,500,598
    
    38,131Mauro
      Bove
    33,521,679
    
    17,050
  13
 Table of Contents
  **Number
      of shares****For**
    ****
    **Withheld**
    ****
    **Abstain**2.
    The
      ratification of Reznick Group, P.C. as independent auditors of the Company
      for the Fiscal year ending December 31, 2005
    
    33,492,906
    
    6,973
    
    38,850
    **Item
5.****Other
Information**





None








**Item
6.****Exhibits**








**Exhibit
      No.**
    **Description
      of Exhibit**
    ****
    **Reference***3.1
    Restated
      Certificate of Incorporation of the Company
    
    Exhibit
      3.1 to Registration Statement No. 33-9370, Amendment No. 1 (filed November
      26, 1986)3.2
    Amendment
      to Restated Certificate of Incorporation of Company
    
    Exhibit
      3.2 to the Company’s Transitional Report on Form 10-K, File No. 0-15070
      (filed March 18, 1991)3.3
    Amendment
      to Restated Certificate of Incorporation of Company
    
    Exhibit
      3.3 to the Company’s Form 10-KSB, File No. 0-15070 (filed April 2,
      2001)3.4
    Bylaws
      of Company
    
    Exhibit
      3.2 to Registration Statement No. 33-9370 (filed October 8,
      1986)3.5
    Amendment
      No. 1 to Bylaws of Company adopted August 11, 1989
    
    Exhibit
      4.7 to Registration Statement No. 33-34551, Amendment No. 3 (filed June
      21, 1990)3.6
    Amendment
      No. 2 to Bylaws of Company adopted June 18, 1990
    
    Exhibit
      4.8 to Registration Statement No. 33-34551, Amendment No. 3 (filed June
      21, 1990)3.7
    Amendment
      No. 3 to Bylaws of Company adopted November 30, 1990
    
    Exhibit
      3.6 to the Company’s Transitional Report on Form 10-K, File No. 0-15070
      (filed March 18, 1991)4.1
    Form
      of Stock Certificate
    
    Exhibit
      4.1 to Registration Statement No. 33-9370, Amendment No. 1 (filed November
      26, 1986)4.2
    Rights
      Agreement, dated as of April 29, 1994, between the Company and American
      Stock Transfer & Trust Company, as Rights Agent
    
    Exhibit
      1 to the Company’s Current Report on Form 8-K, File No. 0-15070 (filed May
      2, 1994)
  14
 Table of Contents  **Exhibit
      No.**
    **Description
      of Exhibit**
    
    **Reference***4.3
    Warrant
      Agreement, dated March 12, 1997
    
    Exhibit
      4.3 to the Company’s Annual Report on Form 10-K, File No. 0-15070 (filed
      March 31, 1997)4.4
    Warrant
      Agreement, dated January 23, 2004
    
    Exhibit
      4 to the Company’s Registration Statement on Form SB-2, File No.
      333-113417 (filed March 9, 2004)10.1
    Patent
      License Agreement - Exclusive, between the U.S. Public Health Service and
      the Company
    
    Exhibit
      10.1 to the Company’s Form 10-KSB, File No. 0-15070 (filed April 2,
      2001)**10.2
    Amended
      and Restated Directors Stock Option Plan
    
    Exhibit
      10.25 to the Company’s Annual Report on Form 10-K, File No. 0-15070 (filed
      March 26, 1993)10.3
    Amended
      and Restated 2000 Stock Option and Incentive Plan
    
    Filed
      as Exhibit A to the Company’s definitive proxy materials, File No. 0-15070
      (filed May 20, 2002)10.4
    Unit
      Purchase Agreement dated March 12, 1997
    
    Exhibit
      10.25 to the Company’s Annual Report on Form 10-K, File No. 0-15070 (filed
      March 31, 1997)10.5
    Registration
      Rights Agreement, dated March 12, 1997
    
    Exhibit
      10.26 to the Company’s Annual Report of Form 10-K, File No. 0-15070 (filed
      March 31, 1997)10.6
    Lease
      Agreement dated April 5, 2002 between the Company and HQ Global
      Workplaces, Inc.
    
    Exhibit
      10.7 to the Company’s Annual Report on Form 10-KSB, File No. 0-15070
      (filed March 31, 2003)10.7
    Employment
      Agreement
    
    Exhibit
      10.8 to the Company’s Registration Statement on Form SB-2, File No.
      333-113417 (filed March 9, 2004)10.8
    Employment
      Agreement
    
    Exhibit
      10.9 to the Company’s Registration Statement on Form SB-2, File No.
      333-113417 (filed March 9, 2004)10.9
    License
      Agreement
    
    Exhibit
      10.10 to the Company’s Registration Statement on Form SB-2, File No.
      333-113417 (filed March 9, 2004) **10.10
    Securities
      Purchase Agreement
    
    Exhibit
      10.11 to the Company’s Registration Statement on Form SB-2, File No.
      333-113417 (filed March 9, 2004)10.11
    Master
      Services Agreement
    
    Exhibit
      10.12 to the Company’s Registration Statement on Form SB-2, Amendment No.
      1, File No. 333-113417 (filed April 23,
2004)
  15
 Table of Contents  **Exhibit
      No.**
    **Description
      of Exhibit**
    
    **Reference***31.1
    Certifications
      dated August 15, 2005
    
    Certifications
      Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
      herewith)31.2
    Certifications
      dated August 15, 2005
    
    Certifications
      Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
      herewith)32.1
    Certifications
      dated August 15, 2005
    
    Certifications
      Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 (filed herewith)32.2
    Certifications
      dated August 15, 2005
    
    Certifications
      Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 (filed herewith)*Except where noted, the exhibits
      referred to in this column have heretofore been filed with the Securities
      and Exchange Commission as exhibits to the documents indicated and are
      hereby incorporated by reference thereto. The Registration Statements
      referred to are Registration Statements of the Company.**Portions
      of this document have been omitted pursuant to a request for confidential
      treatment




16





**Signatures**








In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.






RegeneRx
      Biopharmaceuticals, Inc.
      (Registrant)Date:August
      15, 2005
    
    /s/
      J.J. FINKELSTEINJ.J. Finkelstein
      President and Chief Executive
      Officer/s/
      C. NEIL LYONSC.
      Neil Lyons
      Chief
      Financial Officer


17